If you buy a contract in a speculation inflated position, when push comes to shove, nobody will buy your position back from you. Who wants to buy a contract to purchase oil at $130 when it is available for delivery at $125 at the end of the month.
The “speculators are driving the prices up” buzz words are better translated as the politicians want control of the free market.
IF people fall for this in America, socialist control of the markets will do what it always does, make the people who control the markets rich and destroy the economy.
For the politicians pushing for this, as long as they get rich and secure, if a million starve it is a good trade.
The reason Oil is going up is the dollar is falling and the Chinese are willing to pay what it takes to get the oil.
To say the price of oil is raising the price of everything is also a political lie. An example: A shipment of grain will go up because it costs more to deliver it, but a diamond ring will not, because it does not in relation to its price. The price of oil going up only raises the price of an object in direct relationship to its mass and size.
Gas prices doubling do not double the price of a diamond ring, because it takes very little gas to make it or move it. The price of grain will go up in a ratio of the cost of shipping, and the cost of manufacture. Yes it too will be higher, as oil is used to plant and manufacture. But the price of wheat, and diamond rings is going up nearly the same ratio.
Oil prices are a great indicator of the value of the dollar, than anything else. It is a commodity that is delivered at a constant rate, and is used at basically constant rate that is very very slowly increasing day by day.
We are in a bidding war with China and the rest of the world for oil. The price of oil is set in dollars.
But the value of our dollar is set on REAL ESTATE here in America. Everyone invested in real estate, and the market is having a setback. SPECULATION IN REAL ESTATE drove the value of the dollar UP, not speculation in a simple commodity drove the dollar down.
Real estate is not a commodity, it is a product. It is manufactured not dug out of the ground like copper, gold and oil.
Americans over invested in a market, and went into debt to do it. Investment by debt is a real unstable position and it is backfiring on many people who went into massive debt and bought at the peak of the market.
To make money you have to buy low and sell high, not go into debt to buy high and sell low. Not only do you loose money on the investment, but now you have to service the debt too.
Ouch.
But the big ouch is if we let the politicians and the talking heads brain wash the sheeple into calling for government regulation of the markets.
Even the Communists are smart enough to move away from that disaster, our leaders are stupid enough to move toward it.
As a people, Americans tend to have a very short term viewpoint. And our leaders don't care for the country's future, but their pockets today.
Evey time you hear someone repeat the speculators mantra, shoot them down for your futures sake.
Free Markets is all America has left now that property rights are gone.
That is because the dollar is falling, not because of shipping costs. Far more of the cost of wheat is farmer labor and packaging than shipping.
Our
darn, left edit trash at the end
sorry
That, sir or madam, is barking moonbat nonsense. If I want to spec crude permanently, nothing could be easier. When the front-month contract is about to expire (actually 2-3 weeks in front of that date), I sell it back and buy the same or more crude futures in a month further out. Simple as pie.
Where do I find the buyer(s) for the crude I want to sell? NYMEX, of course. Have you checked the volume in NYMEX crude recently? Yah, didn't think so -- there is not only no shortage of buyers (volume in crude futures today is triple what it was five years ago), there is actually a slight shortage of (willing) sellers, because numerous producers have simply stopped hedging their production.
(Guys, dontcha just love these loons? Shee-eesh.)